U.S. Markets closed

Itau Unibanco to Attract Larger Clients With Iti Platform

Zacks Equity Research

Per a Reuters article, Itau Unibanco Holding SA ITUB is mulling to offset declining card processing fees by offering its new instant payments platform — Iti — to larger clients. The platform is expected to be launched by third-quarter 2019, which will allow the bank to charge fee of up to 1% on transactions.

The platform will use a QR or quick response code, which enables instant payments through a QR scanner or smartphone with built-in camera.

Based on past experience, the company finds card processing services to be more apt for mid-sized and small clients. Marcos Magalhaes, CEO of Itau Unibanco's card processing unit Rede, told Reuters that since fourth-quarter 2018, supplying card processing machines and services to Brazil's largest retailers has become an unprofitable business.

Intense competition in the card processing business made the company look for ways to bolster fees. New entrants such as PagSeguro Digital Ltd and Stoneco Ltd have been gaining market share, and have a strong financial position post IPOs in 2018.

In May 2019, the bank company had announced plans to close 400 branches in the country over the next two years in the bid to cope with increasing demand for digital platforms. It had stated "the reduction of brick-and-mortar branches is a trend to adapt to the needs of clients and demand for digital services."

Itau Unibanco’s restructuring efforts seem impressive and is likely to support its long-term growth. Nevertheless, heightening competition, rising expenses and stressed conditions in the Brazilian economy pose significant risks.

Shares of Itau Unibanco have lost 13.4% over the past six months compared with 13.3% decline registered by the industry.

Itau Unibanco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Picks

Banco Santander Brasil SA BSBR shares have rallied 4.5% over the past three months. Also, the company’s earnings estimates for the current year have remained stable over the past 30 days. The stock carries a Zacks Rank of 2 (Buy), at present.

BanColombia S.A. CIB share price has increased 8.3% in three months’ time. Further, the company’s earnings estimates for the ongoing year have moved 2.7% north in the past 30 days. The stock carries a Zacks Rank of 2, currently.

Washington Federal, Inc. WAFD shares have gained 5.1% in the past three months. In addition, this Zacks Rank #2 company’s earnings estimates for 2019 have moved up 1.6% in 30 days’ time.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Banco Santander Brasil SA (BSBR) : Free Stock Analysis Report
 
BanColombia S.A. (CIB) : Free Stock Analysis Report
 
Itau Unibanco Holding S.A. (ITUB) : Free Stock Analysis Report
 
Washington Federal, Inc. (WAFD) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.